Diesel and fuel prices are smashing records at pumps worldwide, but the real problem is not just crude oil supply. Wars in the Middle East and Ukraine have battered refineries, creating a bottleneck that is hitting drivers harder than the raw oil shortage itself.
Missing millions of barrels
French officials estimate the world is short about 10 million barrels of crude oil each day. That is a huge chunk considering the global economy was burning through 105 million barrels daily before the Middle East conflict erupted.
Iran’s blockade of the Strait of Hormuz initially cut off around 20 million barrels per day. Saudi Arabia tried to ease the pain by shifting exports to the Red Sea, and some tankers started moving again. But now Saudi shipments through the Red Sea are down too, after Iranian-backed Houthis grabbed control of the Bab al-Mandab Strait.
The blow to markets has not been as bad as it could have been. Countries had built up healthy commercial and strategic reserves since production beat consumption in 2025.
Demand has also dropped by more than one million barrels daily, according to the International Energy Agency (IEA). China has slashed crude imports, switching to other energy sources.
The IEA says observed global oil stocks are down by around 507 million barrels since before the war. That figure doesn’t include countries like China that keep their reserve data private.
Refinery crunch hits diesel hardest
Diesel prices have broken records in both Europe and the United States.
American drivers paid a record average of $6.52 (R108,50) per gallon on Monday, according to the AAA automobile association. In France, diesel hit a record average of 2.41 euros per litre (about R44,83) on Sunday, an AFP analysis shows.
“The current world energy crisis, then, is largely a crisis in petroleum products, refined from crude oil, rather than in petroleum itself,” Nobel Prize-winning economist Paul Krugman wrote in a recent post.
“And its proximate cause is a global shortage of refining capacity,” he added.
Western nations have banned Russian petroleum products. Russia has also stopped fuel exports after Ukrainian attacks damaged its refineries.
That has left Russia’s remaining buyers hunting for supplies, pushing prices up.
Gulf nations are major exporters of refined petroleum products, and Iranians have hit refineries in the region.
Even if ships could start moving through the Strait of Hormuz tomorrow, the diesel market would stay tight for a while.
“Diesel prices have risen across all regions because the disruption is global, but Europe is particularly exposed,” said Janiv Shah, vice president at consultancy Rystad Energy. Europe is a net importer of the fuel.
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Few quick fixes available
Short-term options are scarce.
“Technically, there is some unused capacity on paper, but very little that can be activated quickly and supplied with the right crude,” Shah said.
Getting oil shipments moving through the Strait of Hormuz again would likely bring down prices fastest, he said. That would let Asian refineries get supplies.
Toril Bosoni, head of the IEA’s oil industry and markets division, warned last week that “if Gulf supplies remain constrained in the coming months and commercial inventory buffers continue to deplete rapidly, higher prices and further demand reductions may be required to close the supply-demand gap”.
Shah said rising prices would cut diesel use somewhat, but the effect would be limited.
“Diesel demand is relatively insensitive in the short term because trucking, agriculture, construction and industry have few immediate alternatives,” he told AFP.
